Ori­gi­nal-Re­se­arch: Me­dia and Games In­vest SE (von GBC AG): BUY

Re­se­arch | 4 März 2024 00:00

Ori­gi­nal-Re­se­arch: Me­dia and Games In­vest SE – from GBC AG­Clas­si­fi­ca­ti­on of GBC AG to Me­dia and Games In­vest SE

Com­pa­ny Name: Me­dia and Games In­vest SE
ISIN: SE0018538068

Re­ason for the re­se­arch: Re­se­arch stu­dy (Note)
Re­com­men­da­ti­on: BUY
Tar­get pri­ce: 4.50 EUR
Last ra­ting ch­an­ge:
Ana­lyst: Mar­cel Gold­mann, Cos­min Fil­ker

FY 2023 clo­sed with so­lid sa­les per­for­mance; strong new cus­to­mer busi­ness
en­su­red si­gni­fi­cant or­ga­nic growth; re­turn to dy­na­mic growth path ex­pec­ted;
pri­ce tar­get rai­sed to € 4.50; buy ra­ting con­firm­ed

Sa­les and ear­nings de­ve­lo­p­ment 2023

On 29 Fe­bru­ary 2029, Me­dia and Games In­vest SE (MGI) pu­blished its preli­mi­na­ry busi­ness fi­gu­res for the past fi­nan­cial year 2023. Ac­cor­ding to the­se fi­gu­res, the tech­no­lo­gy com­pa­ny achie­ved so­lid re­ve­nue growth com­pared to the pre­vious year (PY: € 324.44 mil­li­on) with its ful­ly in­te­gra­ted ad­ver­ti­sing soft­ware plat­form (ad tech plat­form), ge­ne­ra­ting re­ve­nue of € 321.98 mil­li­on. The ma­jo­ri­ty of re­ve­nue was ge­ne­ra­ted by the tra­di­tio­nal­ly lar­gest ad­ver­ti­sing seg­ment ‚Sup­p­ly Side Plat­form‘ (re­ve­nue share of SSP: 93.6%) with re­ve­nue to­tal­ling € 301.39 mil­li­on (PY: € 298.88 mil­li­on).

On a com­pa­ra­ble ba­sis, the com­pa­ny re­ports a mo­de­ra­te in­crease in con­so­li­da­ted sa­les of 5.0%, which achie­ved a par­ti­cu­lar­ly high growth rate of 16.0% in the fi­nal quar­ter, tra­di­tio­nal­ly the stron­gest quar­ter in terms of sa­les. The sa­les growth achie­ved was main­ly due to an in­crease in the soft­ware cus­to­mer base and the vo­lu­me of ad­ver­ti­sing pla­ced. The num­ber of cus­to­mers on MGI’s di­gi­tal ad tech plat­form in­creased dy­na­mi­cal­ly by 18.9% year-on-year to 2,276 at the end of the fourth quar­ter (num­ber of cus­to­mers at the end of Q4 2022: 1,915). At the same time, the vo­lu­me of di­gi­tal ad­ver­ti­sing de­li­ver­ed in­creased si­gni­fi­cant­ly by 19.1% to 206 bil­li­on at the end of the fourth quar­ter (ad­ver­ti­sing ads at the end of Q4 2022: 173 bil­li­on).

Thanks to the si­gni­fi­cant ex­pan­si­on of the soft­ware cus­to­mer base and the sub­stan­ti­al in­crease in ad­ver­ti­sing vo­lu­me, the com­pa­ny was able to hold its own and even gain mar­ket share de­spi­te a pre­vious­ly dif­fi­cult mar­ket si­tua­ti­on (low CPMs, sub­dued ad­ver­ti­sing bud­gets, etc.). The company’s fur­ther im­pro­ved mar­ket po­si­ti­on in the mo­bi­le sec­tor is also re­flec­ted in the mar­ket-lea­ding po­si­ti­ons on iOS and An­droid with a mar­ket share of 12.0% and 12.0% re­spec­tively, ac­cor­ding to the in­dus­try ex­perts at Pix­a­la­te. Ac­cor­din­gly, we be­lie­ve that MGI has out­per­for­med the ad­ver­ti­sing in­dus­try as a who­le and the over­all ad­ver­ti­sing mar­ket.

In terms of ear­nings, MGI achie­ved growth at all ear­nings le­vels, pri­ma­ri­ly due to the reva­lua­ti­on of the Axe­sIn­Mo­ti­on earn-out pay­ment lia­bi­li­ty (po­si­ti­ve one-off ef­fect of € 62.76 mil­li­on). EBITDA in­creased dy­na­mi­cal­ly by 51.6% to € 128.46 mil­li­on (PY: € 84.75 mil­li­on) com­pared to the pre­vious year. Ad­jus­ted for spe­cial ef­fects (e.g. M&A and res­truc­tu­ring cos­ts or reva­lua­tions of ba­lan­ce sheet items), ad­jus­ted EBITDA (Adj. EBITDA) to­tal­led € 95.20 mil­li­on, a slight in­crease com­pared to the pre­vious year (PY: € 93.20 mil­li­on).

The ad­jus­ted EBITDA mar­gin (Adj. EBITDA mar­gin) in­creased to 29.6% (PY:
28.7%). This in­crease in pro­fi­ta­bi­li­ty re­flects the first po­si­ti­ve ef­fects of the sa­vings pro­gram­me laun­ched last year, which is ex­pec­ted to ge­ne­ra­te an­nu­al cost sa­vings of around € 10.0 mil­li­on once suc­cessful­ly im­ple­men­ted. We be­lie­ve that the ma­jo­ri­ty of the plan­ned sa­vings ef­fects should al­re­a­dy ma­te­ria­li­se in the cur­rent 2024 fi­nan­cial year.

In terms of net per­for­mance, a con­so­li­da­ted re­sult (af­ter mi­no­ri­ty in­te­rests) of € 46.73 mil­li­on was achie­ved, which was si­gni­fi­cant­ly abo­ve the pre­vious year’s le­vel (PY: € ‑20.32 mil­li­on). This si­gni­fi­cant in­crease in net in­co­me was main­ly due to the po­si­ti­ve one-off ef­fect from the reva­lua­ti­on of an M&A‑related pay­ment ob­li­ga­ti­on de­scri­bed abo­ve. In ad­di­ti­on, a re­la­tively low tax ex­pen­se ra­tio also fa­vou­red their po­si­ti­ve ear­nings de­ve­lo­p­ment.

The com­pa­ny gui­dance ad­jus­ted by MGI ma­nage­ment in the third quar­ter of 2023 (sa­les of € 303 mil­li­on and ad­jus­ted EBITDA of € 93.0 mil­li­on) was the­r­e­fo­re ex­cee­ded. Our sa­les esti­ma­te (sa­les: € 303.21 mil­li­on) and ad­jus­ted EBITDA fo­re­cast (ad­jus­ted EBITDA: € 93.07 mil­li­on) were also ex­cee­ded.

Fo­re­casts and eva­lua­ti­on

With the pu­bli­ca­ti­on of the preli­mi­na­ry fi­gu­res, MGI’s ma­nage­ment has also pro­vi­ded a rough out­look for the cur­rent fi­nan­cial year, alt­hough this gui­dance will be fur­ther spe­ci­fied as the year pro­gres­ses. In view of a strong fourth quar­ter (or­ga­nic growth Q4 2023: 16.0%) and an even more dy­na­mic start to the year (or­ga­nic growth Jan. 2024: 18.0%), MGI ex­pects dou­ble-di­git per­cen­ta­ge growth in con­so­li­da­ted sa­les for the cur­rent fi­nan­cial year 2024. At the same time, an im­pro­ve­ment in ear­nings is also ex­pec­ted.

In light of the po­si­ti­ve com­pa­ny out­look, the in­creased (or­ga­nic) growth mo­men­tum and the ex­pec­ted re­co­very of the ad­ver­ti­sing mar­ket, we have ad­jus­ted our pre­vious sa­les and ear­nings esti­ma­tes up­wards. Ac­cor­din­gly, we now ex­pect re­ve­nue of € 352.18 mil­li­on (PY: € 324.74 mil­li­on) and EBITDA of € 100.08 mil­li­on (PY: € 95.56 mil­li­on) for the cur­rent fi­nan­cial year. For the fol­lo­wing fi­nan­cial year 2025, we are fo­re­cas­ting sa­les of € 389.51 mil­li­on (PY: € 357.66 mil­li­on) and EBITDA of € 113.35 mil­li­on (PY: € 108.49 mil­li­on). With re­gard to the 2026 fi­nan­cial year, which we have in­cluded in our de­tail­ed fo­re­cast pe­ri­od for the first time, we an­ti­ci­pa­te a fur­ther in­crease in sa­les and EBITDA to € 437.03 mil­li­on and € 130.67 mil­li­on re­spec­tively.

Over­all, we the­r­e­fo­re as­su­me that MGI will suc­ceed in re­tur­ning to a dy­na­mic growth tra­jec­to­ry with its lea­ding ad tech plat­form. The company’s strong po­si­tio­ning in the in-app and CTV seg­ment in par­ti­cu­lar should pro­ve to be one of the main growth dri­vers. In terms of ear­nings, the cost-cut­ting pro­gram­me laun­ched by the com­pa­ny last year should take full ef­fect from the cur­rent fi­nan­cial year on­wards and thus pro­vi­de an ad­di­tio­nal boost to fu­ture ear­nings.

As part of our DCF va­lua­ti­on mo­del, we have rai­sed our pri­ce tar­get to € 4.50 (pre­vious­ly: € 4.05) per share due to our in­creased sa­les and ear­nings esti­ma­tes. An even hig­her pri­ce tar­get in­crease was coun­ter­ac­ted by hig­her ca­pi­tal cos­ts (risk-free in­te­rest rate curr­ent­ly 2.50%, in­s­tead of 2.00% pre­vious­ly). In view of the cur­rent share pri­ce le­vel, we the­r­e­fo­re con­ti­nue to give the stock a ‚BUY‘ ra­ting and see si­gni­fi­cant up­si­de po­ten­ti­al.

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Cont­act for ques­ti­ons
Hal­der­stras­se 27
86150 Augs­burg
0821241133 0
Of­fen­le­gung mög­li­cher In­ter­es­sens­kon­flik­te nach § 85 WpHG und Art. 20 MAR. Beim oben ana­ly­sier­ten Un­ter­neh­men ist fol­gen­der mög­li­cher In­ter­es­sen­kon­flikt ge­ge­ben: (5a,7,11); Ei­nen Ka­ta­log mög­li­cher In­ter­es­sen­kon­flik­te fin­den Sie un­ter: http://​www​.gbc​-ag​.de/​d​e​/​O​f​f​e​n​l​e​g​ung
Date (time) of com­ple­ti­on: 04/03/2024 (8:20 am)
Date (time) of first dis­tri­bu­ti­on: 04/03/2024 (10:00 am)

——————-trans­mit­ted by EQS Group AG.——————-

The is­suer is so­le­ly re­spon­si­ble for the con­tent of this re­se­arch.
The re­sult of this re­se­arch does not con­sti­tu­te in­vest­ment ad­vice
or an in­vi­ta­ti­on to con­clude cer­tain stock ex­ch­an­ge tran­sac­tions.



Hal­der­stra­ße 27
86150 Augs­burg

Pho­ne: +49 821 241133–0
E‑mail: office(@)gbc-ag.de

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